Bad Experience With Agent And Agency

[achilles 0]

This is to share my experience with readers who might have come here to seek advise about agents as I had when I went through a stressful period and received very helpful advise from some of the forummers here.

Before the lengthy post, 3 points I wish to emphasize.

1. Read through the detailed information available on HDB website.

2. Do NOT sign the unfairly worded commission agreement form.

3. DO NOT TRUST YOUR AGENT, or DO NOT EVEN USE AN AGENT in the first place.

I’ll try to be brief here.

Some time back, my wife and I was house hunting for my first HDB flat in an area near my parents to enjoy the additional grant, an acquaintance referred me to an agent (Lets call her LJ) whom introduced to us 3 flats in the location. One of the flat caught our interest which we expressed to LJ but maintained that we wanted to look around a bit more and not be hasty.

Other the next couple of days, we received a few phone calls from LJ to “share insider information” with us, that there was other interested parties, and that the seller agent is willing to negotiate undertable with us to close the deal below valuation (valuation report not out and based on estimated valuation) Thinking back, these are tricks by both agents to close the deal fast. Feeling hurried, we arranged a 2nd viewing of the flat, and the seller agent offered a price to close the deal undertable. He then acted out a scene infront of the sellers and us to pretend re-negotiation. The whole time, LJ did nothing but watched as bystander. Signing the Option to Purchase, the seller agent pressured us to exercise the Option saying that this way, we only need to pay once for the option not twice. (This has no logic but as first timers we were unaware) Turning to LJ for advise, LJ concurred with the seller agent. We signed to exercise on the spot on LJ’s advise.

Leaving the house, LJ then passed me a paper and asked me to sign as if its part of the OTP papers and part of the procedure. The paper was the commission agreement. I remember coming across a forum post about being careful when signing commission agreement so I asked to take it back to digest the commission agreement before signing it as we were all rushing off.

This is the start of the nightmare. I did some research and realized that the 2 weeks period from signing the OTP and exercising it is in the best interests of buyers as it allows for a longer time for consideration and to work out financial obligations while having the purchase price fixed. LJ never informed us of this. Neither was LJ familiar with HDB policies about income ceiling, housing grants, fiancé-fiancee scheme, eligibility for HDB housing loan which we had to find out ourselves via HDB website and speaking to HDB officers.

We went through a stressful period as me and my wife’s income exceed $8k and thus not eligible for HDB loan and grants. We considered giving up the flat but was not able to as we had exercised the option and thus liable for losses amounting to the difference between our agreed price and the price the seller sells the house at.

The whole time while making several trips to HDB to clarify on these issues, there was no help forthcoming from LJ. There were only consistant calls from LJ / LJ’s manager / LJ’s director pressurizing us to sign the commission agreement. I asked for some of the clauses to be removed as well as stating in detail the scope of work to be done by the agent instead of just paying $xxxx amount of money for services rendered. They did not accede to our request nor was there any form of discussion or negotiation or answer to what exactly is the “services” to be rendered. The clause I asked to remove is that of paying 3% commission if I back out of the house purchase. If there is no completion of sale, there should not be any “service” rendered that would warrant the 3% commission right?

All the calls soon become harassment with raised voices and threats. I maintained that I am willing to pay for services rendered as long as the services/scope of work listed and that clause removed. Services is too broad a term to define if the agent did/did not perform his duties to earn the commission. I maintained my stand that I will not sign commission agreement and its up to LJ whether LJ wants to continue to service me or just leave. The threats grew and LJ ganged up with seller agent and threatened certain actions. Somewhere during these nonsense, I found out that this is LJ’s first HDB case and it was not made known to us at all, although the seller agent knows about this and was asked by LJ for guidance. This to me is misleading the clients and so far, all actions by LJ has not been in the best interests of the client, me.

Although unwilling to proceed with the purchase, I worked out the financial obligations and went ahead to the 1st appointment. LJ was there. We subsequently settle all the paperwork ourselves for the 1st and 2nd appointment. All LJ did was to fill up our names and NRIC on a few pieces of paper. So much for the "paperwork" I see agents talk about.

To cut the long story short. LJ even had the cheek to SMS me to prepare a cheque amounting to 1% to bring on the 2nd appointment date. I sent a cheque with a reasonable commission less than 1% and a lengthy letter, detailing my unhappiness and the events which occurred, to the agency. 4 months passed and no one from the agency even called to apologize/clarify the matter. So much for Singapore’s superior customer service.

The only communication I received after that were letters from their finance department and lawyers letters threatening to sue me and LEGAL CHARGES WILL BE LIABLE by me if I do not pay up the difference. What I did was call them up and inform that I did not owe them anything and they are free to take whatever actions they want with me. By then I was prepared to fight this to the end. Like one forummer said:"The worse that can happen is some time lost and having to pay the remainder". FYI, there are NO LEGAL CHARGES as they can only go through small claims tribunal.

Subsequently, a few further calls from LJ manager / director threatening me and saying a few lies (BTW, a few conversations recorded in my phone) to which I ignored and that was the end of story.

I guess the moral of the story is, see my 3 points above, and do not feel threatened by these A**H*** as long as you got yourself covered.

[zirhk3355 1]

I am glad that you managed handle the matter bravely and not be swayed by those unjustified demand letters and lawyer's letters.

Let me narrate a little more about small claim tribunal; the very first question that the Registrar would ask is, "where is the commission agreement?" If nothing, s/he would be very irritated with the agency, and throw the onus on them to prove that you had in any way agreed to pay the commission, eg verbally, sms, emails, etc.

End of the day, no matter what services was provided by the agent, there is no established legalities to put a monetary amount to such services; ie not automatic one.

They cannot say, "Oh, we provide a service so we deserved to be paid." The basic point is, did the seller/buyer KNOW that a fee was involved, and did they AGREE to pay you? If yes, then must pay. If no, then no need to pay. Period. This is the stand that I can see our Court taking on every of such property agent's cases, which I think is fair and just.

Lastly, I must say you are being very honourable too that you at least gave some commission to the agent because after all, he did work for you although he failed badly in his duties. Some Singaporeans would even seek compensation from the agency for misrepresentation. I think you had done more than enough.

[coffee - kohi 0]

At the end of the day, it is because there is no regulation regulating this agent....causing all the trouble....

did nothing but expect to be paid...idiot.

we also face w few problems when selling my parent's flat, due to stupid agent too. Luckily for us, the seller is genuine buyer, so we close 1 / 2 eyes, as long as the deal went smoothly.

sometime, we argued w agent...funny right, he represent u, yet provide resistent to your demand.....

Edited May 13, 2008 by coffee - kohi

[achilles 0]

I am glad that you managed handle the matter bravely and not be swayed by those unjustified demand letters and lawyer's letters.

Thats why I came out with my story, hoping to give courage to someone facing the same issue to fight it to the end and not be scared by their scare tactics (lawyer's letters, threatening phone calls, using big words like LIABLE FOR LEGAL COSTS etc).

I must say reading some of the forummers advise previously helped me handle some of the issues and taking the stress off by knowing that I'm not the only one out there having the same problem.

Anyway, I was just sick and tired of how corrupted and unethical the industry is and do not want to stoop to their level, gave some commission and closed the case.

[achilles 0]

At the end of the day, it is because there is no regulation regulating this agent....causing all the trouble....

did nothing but expect to be paid...idiot.

we also face w few problems when selling my parent's flat, due to stupid agent too. Luckily for us, the seller is genuine buyer, so we close 1 / 2 eyes, as long as the deal went smoothly.

sometime, we argued w agent...funny right, he represent u, yet provide resistent to your demand.....

I believe that the whole system in place is too messed up that short of a radical LAW be implemented (not guideline), nothing is going to change.

The way moving forward is to STOP using agents and to do the legwork yourself. HDB buy/sell procedures are not complicated and everyone who's able to read English should be able to pull it off yourself.

If all sellers post their flats themselves , and buyers hunt for flats themselves. We can totally eliminate the need for agents (at least for HDB flats, where there isnt much differentiating factor from one to another flat)

I sincerely believe that in my case, there was no value-add from the agent and I am probably better off without the agent. At least I will have 1 less headache.

If you think about it in the BIG picture, effectively 1.5% of all property deals Revenue goes to these leeches as their commission! With no product/innovation, millions of dollars of PURE MARGIN just for service (or lack of service). In no other service sector do you see professionals earning that amount of money for "service" which is not even properly documented , ie lawyers, accountants, auditors

[waileong 0]

1. No one is forced to use an agent. Just because you had an unpleasant experience with an agent doesn't mean others should not use them.

2. Agents are useful for doing all the dirty work people don't like to do, esp. on the selling side. Placing ads, answering calls (incl. bo liao callers), showing and explaining to potential buyers, negotiating, doing the paperwork, etc. They are most useful if you can trust them and give them your keys-- that way you don't have to be home every weekend when buyers want to come. And don't forget that they are results-based-- if you don't sell, they don't get a single cent, but they have to foot all the costs up front.

3. Although the market has a standard 2%/1% commission rate, in business everything is negotiable.

4. I would agree most agents are not innovative-- most just rely on classified ads and phone calls, haven't seen an agent do Youtube videos to market properties yet, for instance. But the service is there-- advertising for you is a service, handling all the calls is a service, showing them around is a service, helping you with the paperwork is a service, etc. You can't deny they do service, although there is of course a difference between good and bad service.

5. I would say the real leeches, esp. for HDB properties, are the conveyancing lawyers. What's the value add in this? Every time a flat changes owners must check if the title deed is good, etc. The original title deed came from HDB, and the bloody flat is clearly from HDB-- so how many times must you check that? And even if the service is necessary, why is it a percentage of the transaction price? Do the checks for title deeds, bankcruptcy, etc. differ for a 3-room flat and an exec apartment? Obviously not-- so why is it not a flat fee per transaction, why is it a percentage? For all the paper shuffling these lawyers earn a percentage fee.

The way moving forward is to STOP using agents and to do the legwork yourself. HDB buy/sell procedures are not complicated and everyone who's able to read English should be able to pull it off yourself.

If all sellers post their flats themselves , and buyers hunt for flats themselves. We can totally eliminate the need for agents (at least for HDB flats, where there isnt much differentiating factor from one to another flat)

I sincerely believe that in my case, there was no value-add from the agent and I am probably better off without the agent. At least I will have 1 less headache.

If you think about it in the BIG picture, effectively 1.5% of all property deals Revenue goes to these leeches as their commission! With no product/innovation, millions of dollars of PURE MARGIN just for service (or lack of service). In no other service sector do you see professionals earning that amount of money for "service" which is not even properly documented , ie lawyers, accountants, auditors

[achilles 0]

1. No one is forced not to use an agent as well. I'm just sharing my opinion that contrary to perceived notion, its not difficult to buy/sell a house yourself even for a first-timer. And based on my own experience, I am recommending that people should consider the DIY route.

2. Perfect case scenarios, your agent is honest and responsible, negotiates the highest price (for sellers) or lowest price (for buyers), is motivated for your best interests instead of for their own pocket and does everything without you needing to lift a finger. Who wouldnt want an agent who can do the perfect job for you? However, based on the complaints on forums, newspaper articles and CASE files, there obviously is a big risk to put so much trust in your agent at such a high cost afterall as we live in an imperfect world.

3. Negotiation is obviously not on the Agency's cards in my case. Try calling up agencies asking to have an agent but stating that you are only willing to pay anything lower than the "guidelines", and also subjected to the completion of your checklist of necessary duties. I get supposedly reputed agencies trying to pass the 2%/1% guidelines as LAWS.

4. I speak for myself when I say this. I do not need innovation from agents. I just need an agent who will be willing to stand by their service. Allow the commission agreement to list ALL the services the agent is to perform and to base the commission payout based on performance instead of just pegged to transaction price.

For agents representing buyers, paying them a commission based on percentage of the transaction price is flawed. The higher the purchase price, the more commission the agent gets to earn, why then would the agent fight to get a lower price for you?

5. I agree with your point.

Following your logic, the selling/buying of a 3-rm flat vs exec aprt does not differs in the amount of work done by agent. Why then should the "guideline" commission be a percentage of transaction price and not a flat fee? If its to motivate agent to get higher/lower price for you, another mechanics can be in place instead.

I have nothing against agents. I just believe that with the current industry practices and lack of regulation is corrupting the whole system. Until the whole system is overhauled , I stand by my own opinion of not using any agents to deal my property.

1. No one is forced to use an agent. Just because you had an unpleasant experience with an agent doesn't mean others should not use them.

2. Agents are useful for doing all the dirty work people don't like to do, esp. on the selling side. Placing ads, answering calls (incl. bo liao callers), showing and explaining to potential buyers, negotiating, doing the paperwork, etc. They are most useful if you can trust them and give them your keys-- that way you don't have to be home every weekend when buyers want to come. And don't forget that they are results-based-- if you don't sell, they don't get a single cent, but they have to foot all the costs up front.

3. Although the market has a standard 2%/1% commission rate, in business everything is negotiable.

4. I would agree most agents are not innovative-- most just rely on classified ads and phone calls, haven't seen an agent do Youtube videos to market properties yet, for instance. But the service is there-- advertising for you is a service, handling all the calls is a service, showing them around is a service, helping you with the paperwork is a service, etc. You can't deny they do service, although there is of course a difference between good and bad service.

5. I would say the real leeches, esp. for HDB properties, are the conveyancing lawyers. What's the value add in this? Every time a flat changes owners must check if the title deed is good, etc. The original title deed came from HDB, and the bloody flat is clearly from HDB-- so how many times must you check that? And even if the service is necessary, why is it a percentage of the transaction price? Do the checks for title deeds, bankcruptcy, etc. differ for a 3-room flat and an exec apartment? Obviously not-- so why is it not a flat fee per transaction, why is it a percentage? For all the paper shuffling these lawyers earn a percentage fee.

[waileong 0]

Your unpleasant experience has blinded you to the following:

1. The commission is negotiated with the agent directly, not the agency. Frankly, agents are like remisiers in stockbroking firms, they are not salaried employees of the firm, and they get to use the agency's name and its facilities in return for a standard fee eg 0.1%. Thus as independent contractors, it is the agent who decides how much commission he is willing to give up in a negotiation. The agency does not and will not negotiate with you.

2. The agent is a salesman for you, if you don't like the offers he has brought you, you don't have to accept and he will not earn a single cent from you. On the contrary, he will in fact lose money if you never accept in the end, because he has to advertise and he has to do all the legwork.

3. As this is basically a sales job, it is and will always be commission based. That is and always will be the compensation model in a sales job. Who wants to be a salesman unless he can get more by selling more? Who wants to hire a salesman if you have to pay him a flat fee regardless of his sales performance?

As far as the buy side is concerned, same story-- you can see 100 properties and you don't have to buy until you like, but the agent still got to do all the work for you (arrange appts, meet you, etc). In fact, on the private property buy side, you pay nothing-- it's co-broke. The model may be flawed, but most people are not prepared to pay on a per viewing basis, so that's how this model came about.

Do you buy or sell shares? Same story right-- your broker also charges you a % commission, though the work of buying shares is no different whether the shares is $1 per counter of $100 per counter. It's a service industry, thus it's commission-based.

Perhaps the time may come where the buy-side model may change-- like in the share market where online brokers offer a flat fee per trade. But because you can't automate property viewing like you can automate share trading, I doubt the model will change any time soon.

4. Lawyers in a property transaction are not in a sales job, that's the diff and that's why I don't see why they should earn a % fee. Esp for hdb where everything is so std. I believe the % model was adopted basically for affordability, ie three-roomers are poorer and thus pay less for the same work compared to ea buyers/sellers. In other words, the EA buyers/sellers subsidise the 3-roomers. While that may be a socially acceptable reason, I still don't like it.

1. No one is forced not to use an agent as well. I'm just sharing my opinion that contrary to perceived notion, its not difficult to buy/sell a house yourself even for a first-timer. And based on my own experience, I am recommending that people should consider the DIY route.

2. Perfect case scenarios, your agent is honest and responsible, negotiates the highest price (for sellers) or lowest price (for buyers), is motivated for your best interests instead of for their own pocket and does everything without you needing to lift a finger. Who wouldnt want an agent who can do the perfect job for you? However, based on the complaints on forums, newspaper articles and CASE files, there obviously is a big risk to put so much trust in your agent at such a high cost afterall as we live in an imperfect world.

3. Negotiation is obviously not on the Agency's cards in my case. Try calling up agencies asking to have an agent but stating that you are only willing to pay anything lower than the "guidelines", and also subjected to the completion of your checklist of necessary duties. I get supposedly reputed agencies trying to pass the 2%/1% guidelines as LAWS.

4. I speak for myself when I say this. I do not need innovation from agents. I just need an agent who will be willing to stand by their service. Allow the commission agreement to list ALL the services the agent is to perform and to base the commission payout based on performance instead of just pegged to transaction price.

For agents representing buyers, paying them a commission based on percentage of the transaction price is flawed. The higher the purchase price, the more commission the agent gets to earn, why then would the agent fight to get a lower price for you?

5. I agree with your point.

Following your logic, the selling/buying of a 3-rm flat vs exec aprt does not differs in the amount of work done by agent. Why then should the "guideline" commission be a percentage of transaction price and not a flat fee? If its to motivate agent to get higher/lower price for you, another mechanics can be in place instead.

I have nothing against agents. I just believe that with the current industry practices and lack of regulation is corrupting the whole system. Until the whole system is overhauled , I stand by my own opinion of not using any agents to deal my property.

Edited May 16, 2008 by waileong

[zirhk3355 1]

I am hesitant to say this but it seemed like the discontent should have been targetted at the final commission amount, rather than the mechanism to compute such amount?

The way of pegging commission to transacted amount is a very common way in several industries, simply because it makes business sense. Very few out there actually peg commission to the intangible 'service'.

Also, I tend to believe that the people who really need an agent would be the lowly-educated ones, whom are usually also lowly-paid. What will happen to them? Facing reality here, if one day agent's commission becomes a fixed fee, it will definitely not be much lesser than what it is now.

The fixing of fee is definitely going to be very debatable - while you could put a fee to the specific form filled up or "consultation" pertaining certain housing issues, how do you fix the fee for, say, viewings? If fee is charged based on per viewing basis, then the obvious that will happen is that the agent is going to bring his wife, children, father, mother, uncles and aunties to come and view your property! How do you judge if the agent had brought a 'good' client?

Also, how do you put a fee to negotiation? Per hour charge? Like legal fees? Pray tell, would you really be happy that you spent like $3000 on agent's negotiation fee and still unable to close the deal?

The most obvious repercussion for fixing agent's fee is that agents would not go the extra mile anymore; they will just try to clock as many chargeable duties as possible, choose to do only those that commands a high fee, and h*ck care the rest. Some may even pride themselves to be an 'expert' in certain duties and start to "specialise".

Then are all agencies' fees going to be the same? It cannot be, because that would be a cartel and against fair competition spirit. So we are going to have agency A charging $500 for paperwork vs agency B who charge $2000 for paperwork + guaranteed 10 viewings. Then agency C, because of low sales volume, they will give a 10% discount and offer 'free' submission of HDB documents. What will happen to agency D, a 'premium' agency, is that they are going to say we shall charge $4000 for 5 viewings + negotiation, but sorry we don't do paperwork; we are the real estate negotiating consultant.

The result is that only the rich can afford the expensive and 'premium' agents, while the not-so-wealthy sellers/buyers will have to bear with the cheaper and inexperienced ones. Then the poor who cannot afford an agent and yet unfamiliar with the legalities and practices, will then fall victims to the unscrupulous ones. So are we going to have an "Agent Aid Dept", just like legal aid for those who cannot afford??

Edited May 16, 2008 by zirhk3355

[achilles 0]

I think my earlier post was totally taken out of context.

Never was I suggesting that having a fixed fee would be the solution. Neither was I suggesting ANY solution. I was merely pointing out the irregularities which can be looked at in detail, debated and improved upon. There are many feedback and suggestions by lots of others which is certainly worth policy makers to look into. Granted, there is no one answer suits all solution, (Else everyone can be ministers or chiefs of stat boards), it does not mean that the current system is perfect and does not need improving. (and when I mean system, I'm not refering to just the commission/payment structure).

When something is not perfect, in the true blue Singaporean-style, policymakers look at the issue, disassemble it, debate, feedback and come out with something to better the situation. Eg can be Transport ministry, COE implementation, road tax revisions, ERP, Bus lanes, FULL Day Bus lanes, Taxi pickup rules within CBD,

All along, the purpose of my post is 1.To share my own personal experience with people who might or might not be aware of the pitfalls of engaging agents. 2.To voice my personal opinion that I'm better off without an agent. 3. That my personal opinion is not likely to change unless there is an overhaul of the system.

I'll leave the solution-making to the policymakers. That I have no control over. What I can control is not using agents myself, and if enough people is aware of the advantages/disadvantages, the market forces will speak for themselves.

Let those who agree, agree and others, agree to disagree.

[zirhk3355 1]

Aiyo, cool down lah.

You might have forgotten that you did suggest some kind of a solution here: http://www.renotalk.com/forum/index.php?s=...st&p=296082

Also, from your posts it does seemed that your grouse is not in the mechanism of computing commission itself, but more because you felt the fees are too high for you. Sorry if I had assumed wrongly.

But I am sure nobody is finding fault here; its all a discussion and never personal. If we only want to voice our opinions and not hear others, then we are better off writing a blog than to come to a forum.

I am sorry also if my post came too strongly, but its also based on my past experiences as well.

To be fair to those hardworking and good agents, in improving the messy situation of the real estate industry, the bar for the agents' service standards must be upped, rather than to cut down on their income. BTW, in comparison, agency's fees in Singapore already pales in comparison to those in other developed countries.

[waileong 0]

In general, the govt prefers to let the free market decide how things pan out rather than intervene wherever possible.

Just because there are complaints or some black sheep in an industry does not in and of itself mean the govt will step in.

I think it's the right attitude, people should learn a sense of caveat emptor rather than run to a nanny govt.

[zirhk3355 1]

I am a strong believer of paying more for good service, rather than to try and pay less when the service is sub-standard.

[vampree 0]

Then are all agencies' fees going to be the same? It cannot be, because that would be a cartel and against fair competition spirit.

erh .. take a look at the petrol companies here ....

i guess as in any industry, the black sheeps + totally incompetent agents bring more grief/despair to the consumers than desired .. just like car salesman etc

but sometimes as consumers, we also need to manage our own expectations right ? For some pple, by paying a fee, they expect to be served 24/7 and all things to trn out right but in reality things dun work that way right ?

As a buyer/seller, i see an agent as someone who will for a fee, manage all paperworks and arrange viewing appointments and answering questions on property/housing legalities, housing area (eg) amenities, procs and cons of area etc and dealing with the seller/buyer etc.

But ultimately the difference is: as buyer, I have final say on which house I will buy and how much and as seller, I have final say on which buyer I want to sell to and how much.

[chronograph 0]

But ultimately the difference is: as buyer, I have final say on which house I will buy and how much and as seller, I have final say on which buyer I want to sell to and how much.

Jackpot!